Energy Transfer LP (ET) Q3 2026 Earnings Call Transcript

Operator: Good day, and welcome to the Energy Third Quarter 26 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by the number 1. After today's presentation, To ask a question, you may press star then 1. Please note this event is being recorded. I would now like to turn the conference over to Tom Long, CEO. Please go ahead.

Thomas E. Long: Thank you, operator. Good morning, everyone, and welcome to the Energy Transfer Third Quarter 26 Earnings Call. I am joined today by Mackie McCrea, Dylan A. Bramhall and other members of the senior management team. are here to help answer your questions after our prepared remarks. Hopefully, you saw the press release we issued earlier this morning. As a reminder, our earnings release contains an update to guidance and a thorough MD&A that goes through the segment results. We encourage everyone to review the release and slides on our website for full understanding of the quarter and our growth opportunities. We will be making forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1.93 thousand. These statements are based upon our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our Form 10-Q for the quarter ended 09/30/2026 which we expect to file later this week. I will also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non GAAP financial measures. You will find a reconciliation of our non GAAP measures on our website. Let's start today by going over our financial results. For the third quarter of 2026, we generated adjusted EBITDA of approximately $5 billion compared to approximately $3.8 billion the third quarter of last year. DCF attributable to the partners of ET as adjusted was approximately $2.5 billion compared to approximately $1.9 billion for the third quarter of 2025. Strong performances across all our business segments supported these results, including record intrastate transportation volumes following Hugh Brinson Phase I entering into service and record midstream gathering volumes. And for the first 9 months of 2026, we spent approximately $3.9 billion on organic growth capital, excluding Sun and USA Compression CapEx. Turning to our 2026 adjusted EBITDA guidance. For the third consecutive quarter, we captured meaningful upside from market volatility reflecting the quality of our diversified asset footprint. As a result, we expect our full year adjusted EBITDA to range between $19.7 billion and $19.9 billion, which is up $850 million at the midpoint compared to our guidance range provided on our last quarter's earnings call. Our revised 2026 guidance reflected outperformance in the James business and the benefit of approximately $285 million of previously disputed natural gas purchases. With a downstream customer recognized in the fourth quarter of this year. We have not included any benefit from the Vaquero acquisition, which is expected to close in the mid-fourth quarter of this year. Now turning to organic growth capital guidance. We expect our 2026 organic growth capital to be between $5.4 billion and $5.6 billion excluding Sun and USAC. As we advance certain projects toward FID and refine the timing of others, we currently expect 2027 growth CapEx to be approximately $7 billion. We will provide formal growth capital guidance on our next quarter's call. The majority of these growth projects are contracted under long term commitments and are expected to generate mid teen returns, resulting in considerable earnings growth over the next decade plus. Now let's turn to our results by segment for the third quarter. And I will start with NGL and refined products. Adjusted EBITDA was approximately $1.2 billion compared to approximately $1.1 billion for the third quarter of 2025. These results were driven by increased exports out of our Nederland and Marcus Hook terminals, as well as higher throughput at our Mont Belvieu fractionators. Results for the third quarter also included an increase of approximately $177 million in marketing margin from favorable market conditions, including increased premiums, on both domestic and export sales of NGLs and higher volatility. Approximately $100 million of this gain is expected to be offset over the next 2 quarters as the derivative losses are realized. For midstream, adjusted EBITDA was approximately $864 million compared to approximately $751 million for the third quarter of 2025. This was primarily driven by record volumes in the Permian Basin which increased approximately 8% as a result of new plants being placed into service and improved plant utilization as well as volume growth in several other regions. In addition, we saw an approximately $70 million increase due to higher NGL and natural gas prices compared to last year. For our crude oil segment, adjusted EBITDA was approximately $871 million compared to approximately $746 million for the third quarter of 2025. During the quarter, we saw continued growth across several of our crude oil pipelines and gathering systems. These results also included an increase related to favorable market, primarily stronger spreads and increased volatility. Approximately $100 million of this gain is expected to be offset in the fourth quarter as the derivative losses are realized. In our interstate natural gas segment, adjusted EBITDA was approximately $500 million compared to approximately $431 million for the third quarter of 2025. The primary driver of these results was higher contracted volumes and utilization on several of our pipelines, including Transwestern, Robert, Panhandle Eastern, and Florida Gas Transmission. And for our intrastate natural gas segment, adjusted EBITDA was approximately $346 million compared to approximately $230 million in the third quarter of 2025. This was primarily due to an increase of approximately $82 million of gross margin as volumes continue to ramp up on Phase I of the Hugh Brinson pipeline, The $82 million is inclusive of optimization volumes that flowed on the pipeline during the quarter. We recently announced plans to acquire Vaquero Midstream for approximately $2.625 billion in cash and ET common units. The acquisition is expected to be immediately accretive to distributable cash flow per common unit and represents an approximately 8.5x multiple on 2027 estimated EBITDA. We anticipate this drops to below 7x by 2029 as we increase utilization of existing processing capacity. The Vaquero assets include approximately 300 miles of pipeline in Loving, Reeves, Ward, and Winkler Counties. As well as 3 natural gas processing plants with a total capacity of approximately 675 million cubic feet per day. The acquisition will expand and enhance energy transfers integrated natural gas gathering and processing network and add additional volumes to our downstream natural gas and NGL infrastructure. The system is supported by high quality customers with an average contract life of approximately 10 years and will become an integral part of our extensive pipeline network in the Delaware Basin. We expect the acquisition to close in the fourth quarter of this year. subject to regulatory approval and customary closing conditions. Now turning to our major growth project updates. Starting with natural gas. Phase 1 of the Hugh Brinson pipeline is in service with a capacity of 1.5 Bcf per day. We expect Phase II, which includes additional downstream compression, to be in service in the first quarter of 2027. Increasing the expected capacity to over 2.3 Bcf per day. The full project is still expected to come in under budget. We continue to see interest from customers seeking to increase commitments and new customers looking for Permian egress. On the last call, we announced an agreement with Crusoe to construct natural gas supply facilities supporting its previously announced 900-megawatt expansion at its AI factory campus In Abilene, Texas. In furtherance of this agreement, we have now executed a 250 thousand MMBtus per day 10-year firm transfer transportation agreement with an A-rated hyperscaler. Next, we are making good progress on our Desert Southwest pipeline project. We expect to file the formal certificate application with FERC in the fourth quarter. We continue to see interest in contracting additional volumes on the pipe which includes multiple electric utilities. Our teams remain engaged with key stakeholders along the pipeline route. Last quarter, we announced Transwestern's Springerville lateral This quarter, we added the construction of the Cholla lateral project approximately 30-mile, 20-inch pipeline with an expected capacity of approximately 100 thousand Mcf per day that will extend south from ET's existing Transwestern pipeline to a local utility. The new lateral will enable the conversion of a coal fired power plant to a natural gas service and is expected to be in service in the first quarter of 29. Growth capital associated with this project is expected to be fully reimbursable. To support the growing markets in the Southeastern US, earlier this month, we reached positive FID on the 215-mile South Mississippi pipeline project. Which will extend from a connection near the Perryville hub to an in. Interconnect on the FGT pipeline in Southern Mississippi. We have secured long term 20 year demand based firm transportation agreements to support construction of a 36-inch pipeline with a capacity of approximately 1.2 Bcf per day at an expected cost of approximately $1.6 billion. Energy transfer will likely be a 51% owner and operator of this project with the remaining ownership coming from shippers or their affiliates. A binding open season is currently underway to solicit additional customer commitments. We are discussing and, in some cases, negotiating with multiple shippers. Final pipeline sizing and capacity will be determined after the open season. This project, which is expected to be in service in 2030,, will give shippers greater access to natural gas from multiple US producing basins to markets in the rapidly growing Southeastern United States. And in the Northeast, on our rover pipeline system, we recently completed the addition of compression and metering facilities to support a 15-year transportation agreement with a Marcellus producer. The agreement, which added 250 thousand MMBtus per day of firm natural gas volumes to the pipeline system began November 1. Looking at new power plant connections, Oklahoma, the first 3 connections serving new power plant loads are in service and we expect the fourth to be in service in the fourth quarter of 2028. We recently executed an agreement to provide natural gas service to a fifth power plant in Oklahoma. In total, these will provide approximately 400 thousand Mcf per day of new demand growth. In addition, we are in negotiations to serve another 100 thousand Mcf per day of new power plant demand in Oklahoma. And in Missouri, we have executed 2 agreements to provide a total of approximately 150 thousand Mcf per day affirmed natural gas transportation service from our Mississippi River transmission pipeline. The 2 new power plants being constructed. To support these agreements, we will add pipeline and metering facilities. Growth capital associated with the construction of these facilities will be fully reimbursed, and the agreements are expected to become effective in late 27 and mid-2028. Since the beginning of 2025, we have executed over 9.5 million MMBtus per day of agreements with demand pull customers, including hyperscalers, data centers, and power plants to provide volumes associated with our natural gas business throughout Texas, Oklahoma, Arkansas, Louisiana, Ohio, Illinois, and many other states along our pipeline network. We are in advanced negotiations to provide customers with significant additional volumes along our pipeline network and remain confident in our ability to reach FID on many more such opportunities. Now looking at our Permian processing expansions, we placed the Mustang Draw II plant into service in October. And expect the volumes to ramp up through the first half of next year. We also recently reached positive FID on Bear II, a 200 thousand Mcf per day cryogenic processing plant in the Delaware Basin adjacent to our existing Bayer processing plant. Bear II is expected to cost approximately $225 million and be in service in the third quarter of 2027. Now looking at our growth opportunities for our liquids business, as a result of the significant growth in the Permian, as well as the Vaquero acquisition, we reached positive FID on our 10th fractionator in Mont Belvieu. Frac X is expected to have a capacity of 200 thousand barrels per day and be in service in the first half of 2029. Which will bring our total capacity at Mont Belvieu to approximately 1.6 million barrels per day. In addition, we expect volumes on Frac IX to ramp up quickly after its anticipated completion later this year. At our Nederland terminal, previously announced a 240 thousand-barrel per day ethane export expansion to meet additional customer demand. We have since elected to upsize this to approximately 300 thousand barrels per day which will be achieved through optimization of our Mont Belvieu to Nederland pipeline corridor. This project will also provide an additional 55 thousand-barrels per day of LPG capacity and 2 additional NGL ship docks. We still expect the project to be placed in service in stages beginning in 2028 with the docks expected in mid-2029. At Marcus Hook, the ethane expansion project is on schedule for anticipated completion in the second half of 2027. This is now expected to increase our ethane export capacity from the terminal to approximately 100 thousand barrels per day. We have executed agreements with existing customers to offtake approximately 75% of this capacity for turns extending out through late 2030s and early 2040s. Growing NGL demand across India, South Korea, China, and Europe supports continued growth at our Nederland and Marcus Hook export terminals. Our strong base business performance and volume growth within each of our segments along with a third straight quarter of significant upside from market volatility drove solid earnings results Phase 1 of Hugh Brinson pipeline began contributing a meaningful way during the third quarter and this contribution will increase as we bring on Phase II. In addition, Mustang Draw II is also now up and running. Frac IX is expected to go into service later this year, and the pending Vaquero acquisition which adds to our Delaware Basin footprint is expected to be immediately accretive to DCF per unit upon its closing later this year. Looking ahead, the growing demand from power generation and NGL markets continue to create new growth opportunities evidenced by our newly announced expansions to our processing capacity in the Permian, our natural gas pipeline business expansion, and the upsides to our planned ethane export expansion project. With a large slate of growth projects under construction plus the newly announced projects, we continue to be very well positioned for growth in 2027 and beyond. We remain focused on capital discipline as well as project execution, and completing these projects safely on time and on budget. In summary, the quality, and connectivity of our assets give us a clear line of sight to growth. From the wellhead to the export dock, our integrated system, lets us serve every major supply basin and every major demand center and we believe this is a unique and stable competitive advantage. This concludes our prepared remarks. Operator, please open the line up for our first question.

Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Theresa Chen with Barclays. Please go ahead.

Theresa Chen: Good morning, and thank you for taking my questions. First, I would like to dive deeper into the South Mississippi project in light of today's FID. Given recent commercial progress for transmission expansions to support the rising power load across the Southeast. Can you elaborate on the address demand underpinning this project? Any downstream implications And more broadly, how will the South Mississippi project strategically enhance your natural gas footprint?

Marshall S. McCrea: Good morning, Theresa. This is Mackie. What a great opening question because I think this project shows the power and the ability of energy transfer to perform like no others. And the reason I say that is what South Mississippi does for us, it connects all of our pipelines that come into the Perryville area down to FGT, which continues to grow. And what it gives the markets, the shippers, the opportunity to do is to reach out to all the basins. With the uncertainty in the future of where prices will go and where volumes will go some of our customers on this project alone are reaching out to the Permian Basin Haynesville, and even up in the Marcellus, Utica. They have taken long term space out of there. So it really shows what we can do for customers throughout The US, but especially in the Southeast We are very excited about that project. And to elaborate a little deeper on your question, we continue to see constant growth in Southeast, especially Florida and other areas. And so in the middle of Phase IX as everybody knows. We are working on Phase X. We already have, we are talking to. But 1 thing that really is not very evident that we have tremendous capability by when we connect this pipeline to Florida to move large volumes backhaul. Into the heart of Louisiana. And as everybody knows, there is a lot of LNG projects being completed and built there. there is also some massive projects that will consume large amounts of natural gas, and that this will be a great project to help support those types of markets. So it is an exciting project. Our team did a great job getting to the finish line. It fits in perfectly with our assets.

Theresa Chen: Thank you so much. For that detailed answer, Mackie. Looking at your current growth CapEx in the mid-$5 billions this year, and then stepping up to about $7 billion next year, plus a significant amount of projects under development from here how are you thinking about the magnitude of run rate CapEx over the next few years beyond 2027?

Dylan A. Bramhall: Theresa, this is Dylan. Thanks for the question. There. I think as we look out, 27 right now looks be looks to be 1 of our larger years, definitely we have had in the past. And as we look out, as we look out further, it is probably expected that we are gonna be north of $5 billion in that area for the for the next several years here with this great backlog we have. But I think 2027 definitely looks like looks like probably the high watermark as we see it right now.

Theresa Chen: Thank you.

Operator: The next question is from Jeremy Tonet with JPMorgan. Please go ahead.

Jeremy Tonet: Hi. Good morning.

Marshall S. McCrea: Good morning. Good morning, Jeremy.

Jeremy Tonet: Just wanted to, you know, look forward into 2027 a little bit here. 2026 enjoyed a lot of nice tailwinds across a number of the business lines. But when we think about, I guess, the 2027, how do you see those, I guess, continuing? Do you still expect some of those tailwinds to be as strong? Or how should we think about that, particularly as it relates to when you introduced the 2027 guidance?

Marshall S. McCrea: Yes. I can start. And Dylan or Adam can add on to it. As we as Tom explained in the opening remarks, all these projects that we are building are so exciting to bring on. And 1 of the reasons are that on long projects take years, a lot of these projects coming on as we speak this year as we talked about and throughout 2027 with Frac IX ramping up with our cryos ramping up, another crowd coming on in the third quarter of next year. Is that, these projects are filling up quickly. The demand for our products and what we do, especially natural gas, is gonna continue to grow exponentially. We are trying to stay ahead of that with these projects. So that will be a lot of the driver behind this is how quickly volumes bring value to these assets as we complete Yeah.

Dylan A. Bramhall: And, just to talk about this year relative next year a little bit. We are not. We do not have front run guidance here. But if you recall, when we start out the year, we talked about the optimization opportunities we have. We generally have couple hundred to $400 million in our plan as we go into the year. And generally, we have outperformed that. I think if you look historically, that number is probably more than $600 million to $700 million range a year. But we do not always know exactly where it is coming from. We are just. We have an asset base and a group of dedicated employees that are set up to optimize around these situations. And this year has presented more opportunities than most We are looking at something probably closer to $1.5 billion across this year. And so when we come out with our guidance, we will. We will take all this into account and more to come on that.

Jeremy Tonet: Got it. that is helpful. Thank you for that. And then maybe just coming back to, the natural gas logistics side, some new developments there. And if I just take a step back and I think about new power demand, was wondering if you might be able to just frame for us how you think of the opportunity set going forward, be it CapEx, and how much EBITDA that could generate? Any parameters, I guess, far as you see the opportunity set in front of you right now for more, natural gas logistics projects?

Marshall S. McCrea: Hey, Jeremy. This is Mackie again. Yeah. I think it is pretty evident when you look at our pipeline network throughout the country, how well positioned we are We have made a lot of announcements, working on a lot of other, projects to deliver gas to power plants and we are, so extremely well positioned And then you look at how we have the capability, as I mentioned earlier, to move volumes from different basins to different markets A great example of the benefit of that is of course, South Mississippi, but also Hugh Brinson. And that project is built. Was built to move large volumes out of the Permian Basin east and now we are seeing a growing demand to move volumes out of the Carthage Katy area deeper in Texas in a backhaul basis through Hugh Brinson. So there is just so much upside. And then when you look at because of how well positioned we are and where a lot of these power plants and a lot of these power plants that are back in data center, where they are located, are immaterial from the standpoint of capital to get to them. These are, in many cases, 2, 3, 4 miles away, maybe 18 miles away. So low capital to benefit from existing assets existing capacity, I mean, on our assets especially in a backhaul basis. A little bit down the road here in the next 2 or 3 years, with all these power plants being built in Texas and throughout the country, LNG taking off, there is on any given day, molecules will be moving multiple directions through our pipelines. We will be charging for all those different directions. But in effect, a lot of it being consumed of where it is being delivered and consumed of where we receive it. So our vast intrastate and intrastate pipeline network is going to create a lot of potential upside in the future.

Jeremy Tonet: Got it. Thank you for that.

Operator: The next question is from Keith Stanley with Wolfe Research. Please go ahead.

Keith Stanley: Hi. Good morning. I wanted to follow-up on the South Mississippi project connectivity. So assuming this would pull some gas off Tiger or Gulf Run, How full are those pipelines today? And do you think you need to expand them or other assets to accommodate the project just wondering holistically if this is gonna drive other opportunities upstream of the South Mississippi project.

Marshall S. McCrea: Yeah. The answer to that, Keith, is It will drive, other upstream opportunities. As I mentioned, we have 1 of the contracts that is supporting South Mississippi has signed a long term deal starting in 2029 for capacity out of Marcellus, Utica down our Panhandle trunk line. We have more capacity All of our assets, we can always loop or add compression if necessary. But right now, we have plenty of capacity in our existing system to move gas out of Texas, out of Oklahoma, into the Perryville area. And we also have the ability, of course, to extend further upstream to the Permian Basin as well. So there. Certainly, those will bring other opportunities, but we already are so well positioned that with the capacity we have today, to provide transportation services to feed that new project.

Keith Stanley: Brent. Thanks for that. I Second 1, Dylan, I wanted to follow-up on the billion and 0.5 of optimization benefits for this year versus the $200 million to $400 million kinda baseline Is that excess earnings purely spread and volatility benefits? Or is the $1.5 billion dollars also including benefiting simply from higher commodity prices that could very well continue into next year at this point.

Dylan A. Bramhall: Yeah. Keith, it is it is it is all the above there. And it really crosses every segment. We are we are sitting here taking a look. I am staring out at my sheet here. We were looking at just the drivers from the increase in guidance from last quarter to this quarter. And it is every single segment in our business. it is up. And it is it is the higher prices. it is the spreads. it is the volatility. it is also just additional volumes across assets too that are that are driven by some of the global volatility. That we are seeing. So it is really. it is a it is a lot of great tailwinds right now and I think you are correct. there is. Some of this could very well extend into 2027.

Adam Arthur: And, Keith, hey. This is Adam. Just 1 thing I would add to that and point out is while. Yeah. We have certainly benefited from that volatility continue there is also definitely an underlying pull globally. You know, we recently were on a trip here to Asia and heard, you know, firsthand that we have been the stable source of supply in this storm that. that is happened globally. And so we expect that business and that pool to continue and support the assets for longer at higher rates.

Keith Stanley: Thanks very much.

Operator: The next question is from Julien Dumoulin-Smith with Jefferies. Please go ahead.

Julien Dumoulin-Smith: Maybe just following up a little bit on the South Mississippi focus, Mackie. Can you talk a little bit of what is going on with Entergy? I mean, they obviously made a sort of a parallel announcement yesterday. Can you perhaps maybe tether those 2 together? And as much as folks are trying to triangulate how you think about this? And then more to the point, how do you think about the opportunity above and beyond what you are seeing here? As much as if you read the line with Entergy, they seem to be talking about even more here. If you will. And, ultimately, what this means for a 42-inch configuration. Yeah.

Marshall S. McCrea: You bet, Julien. Yeah. First of all, probably will not talk about specific customers As you know, we have done a huge deal with Entergy up in North Louisiana to provide transportation service off of Tiger. For their a facility up there, a power plant up there, and we continue to be in conversation with them everywhere where we can provide services to them. But when talk specifically about them on this project. However, as I mentioned earlier, this project is so significant to our partnership because of the growing demand along the Gulf Coast is exponential. And, with our ability to move more volumes east, down South Mississippi and east through Florida Gas, as I mentioned earlier, it is a really important point We have the ability to backhaul 2 Bcf from South Mississippi deep into Louisiana, to markets that are growing, markets that are there today, and significant markets that are planned and actually being developed as we speak. So South Mississippi gonna be a great conduit to help other projects downstream and other markets downstream on FGT.

Julien Dumoulin-Smith: Awesome. Excellent. Thank you very much. Maybe just getting a little bit more to the numbers here. Maybe it is more Dylan. You know, so, obviously, you raised the guidance meaningfully here, you $900 million, pretty solid. Can you speak a little bit more to the drivers? Right? Obviously, there is a few different pieces here. You got marketing earnings in third quarter that waned a little bit, but how do you think about the guide up you know, being tied more to the first half of this year? Obviously, Vaquero in there, but you know, how do you think about the different the stacked pieces here, if you will?

Dylan A. Bramhall: Yeah. So I will just I will focus on really what we are seeing here and then and then the drive up from the last call to this call here. And like I said earlier, it is it is every segment. So midstream, we have seen not just higher commodity prices. it is better operational performance. Better run time in the Permian, which has resulted in more efficient operations and more volumes through our facilities. it is the crude segment where we have benefited not just from the increased volatility and the spreads, but also from additional volume across our assets. NGL has been a great performer here. Similar to crude, the better volatility, better spreads. More volume, still seeing great demand across the docks for our products, strong rates there. The intra. Intrastate pipelines, we got Hugh Brinson online right now, and then this segment will also benefit from the resolution of the of the dispute with the customer that we are gonna recognize here on the fourth quarter. Inter and other both contributed They are both kind of the steady Eddie segments, but they are. Even both of those are up. As we just continue to see strong demand across all the assets. And then finally, Sunoco cannot cannot forget the job they are doing there right now. And, and really outperformance across all their segments. Really strong refining earnings, but also all their other segments as well are really hitting on all cylinders. So you put all that together, and it is just. it is a it is a really large increase from the last call or this call here. And some of that is. A lot of that is the Q3 performance, but we do still as we are looking at a Q4, we see Q4 up from where we had it 3 months ago as well.

Julien Dumoulin-Smith: Yeah. it is, it is pretty striking. And then just to sneak it in here, this. The lateral economics here in terms of incremental gas supply deals, Anything you would care to share about how. What that looks like prospectively? Obviously, it is de minimis CapEx. So if any leading indicators there or just how meaningful that could be? Is it is it. You kind of leverage your assets here, the operating leverage of your assets? If there is anything you could share at this point.

Marshall S. McCrea: Yeah. You bet. This is Mackie again. And like I said, because of where our pipelines are and because of where a lot of these power plants being built, the data centers, etcetera, we are very fortunate. And so even in the laterals that were we are building off Transwestern or North End, both of those are nice projects for us, gonna create some good upstream revenues. These are pipelines that are going to coal fired plants that are being replaced with natural gas fired generation, which is gonna be a common theme as we go on. And we are just so well positioned there. And like I said earlier, throughout the country, to spend fairly immaterial dollars to connect a large power plant loads Awesome, guys.

Julien Dumoulin-Smith: Thank you. Thank you.

Operator: The next question is from Jean Ann Salisbury with Bank of America. Please go ahead.

Jean Ann Salisbury: Hi. Good morning. There has been increased bullishness on Permian crude growth partly because there is been so many Permian gas pipelines announced. I believe most of Energy Transfer's Permian crude volumes are traveling at spot rates, Do you see this Permian crude supply demand balance tightening over the next few years? And would you seek to contract out more of this space? And as a follow-up, would you have to see in the basin to consider adding new crude pipeline capacity? Thanks.

Adam Arthur: Yeah. Hey, Jean Ann, it is Adam. Brent question. So, yes, we definitely are expecting more growth And, you know, I would like to point out that as we see the GORs increasing, it is not, it is not surprising to us we are seeing more gas pipelines added relative to crude egress you are you are you are spot on the amount of our capacity that is moving under spot rates. You know, we took a view when we went through the recontracting phase that our, the rates that the market were. Was willing to pay were undervalued. And I think this year has been a great example of that being true. And so, of course, we will look to, you know, contract the pipes long term, assuming that the values get to where we view them as appropriate. And, you know, there is clearly a lot of value in these long haul pipes. I think we serve different markets than several of our competitor pipes. Which also, you know, provides an incremental level of intrinsic value to our system. Know, as far as looking to expand, I think there are several low hanging fruit expansions that people like us and others in the industry can do. And as, you know, people are signing up for contracts and rates are appreciating, we will certainly look to those in the future.

Jean Ann Salisbury: Brent. Thanks a lot.

Operator: The next question is from Gabe Moreen with Mizuho. Please go ahead.

Gabriel Moreen: Hey, good morning, everyone. Can you maybe just talk about the rationale for VICARO versus some of the other GMP systems that are transacted in the Permian. And I am just curious with the FID ing of Frac X, to what extent having Vaquero under your belt might have prompted that? And also, timing on future Vaquero processing FIDs is expensive.

Adam Arthur: Yeah. Yeah. Really for us, Vaquero, you know, it sits in a really great spot in our system. And so, we are already very well connected to Vaquero on all fronts, on the upstream front, You know, we have taken advantage, and so have they of utilizing each other systems when we have maintenance and other events in the field. As well as, being connected, with the NGLs and down downstream. Other downstream products. So the system, you know, really made a lot of sense to us as a as a very good quality bolt on, and we expect to be able to grow volumes with our system with a bigger contract mix now, with all those plants and further expansion there. You know, we also, on the downstream side, as it relates to Frac X, we. You know, the y grade team as well as our upstream, midstream team have done a really good job of bringing new volumes to the system and contracting our y grade system. So while Vaquero certainly helped with us make the decision on Frac X, it was not the only driver.

Gabriel Moreen: Brent. Thank you.

Marshall S. McCrea: And then maybe How was that how that Okay. I was trying to add to that too.

Dylan A. Bramhall: When you think about Vaquero and you look at the multiple and the multiple coming down, that is just really filling up the processing capacity that is there. As far as thinking about synergies, we did not add the downstream in the synergies. it is a lot of volumes off these assets that are definitely helping support new capital projects going forward like Frac X where that obviously supported But the economics that we put out there as far as multiples is really just centered around the processing capacity there and bringing new volumes onto that system.

Gabriel Moreen: Brent. Thanks, Dylan. And maybe then if I can ask a little bit about credit risk, particularly as it pertains to contracting for some of these data center demands. Talk about how you are evaluating that? How much you are scrutinizing different projects? Maybe what sort of assurances you are asking for before you enter into projects. I know some of these projects are not the most capital intensive, but I am just curious kinda what the process might be there. Whether that is been evolving.

Adam Arthur: Yeah. So we have we have a very robust cap or credit process anytime we are looking at putting capital out there or spending money on new assets, and that goes for goes the same for the data center projects even when it is smaller capital dollars on laterals. We are generally we are generally making sure that we are contracting through to an investment grade counterparty. And so that can take many different forms. I wanna talk specific to any customers, but, generally, generally, we are getting some form of parental guarantee for the for the contract value or a large portion of the contract value, so that we are protected upstairs. In the few cases where we have done something with noninvestment grade counterparties, generally several years' support of. Through an LC or a surety bond or some sort of credit enhancement like that. To give us some protections in the event of any sort of insolvency always looked at it. A couple of years gives us gives us time to get recontracted on the space then. As these assets are all. These assets are being built are all gonna become very critical to The US infrastructure here. For many years come.

Gabriel Moreen: Thanks, Tom.

Operator: Our last question comes from John Mackay with Goldman Sachs. Please go ahead.

John Mackay: Hey, team. Thank you for the time. I will just do 1 quick 1. Obviously, elections today, not gonna ask you to weigh in on that. But just be curious, the tone from your customers you are hearing are they waiting on kind of today's outcomes to move forward with some projects? Or said differently, depending on how, let's say, today goes. Think you could see a pickup in contract announcements on the gas side? Thank you.

Marshall S. McCrea: Gosh, I guess we are all kind of looking at each other. I do not really. it is Mackey. I do not really have conversations with customers around politics. How that might affect. Now, certainly, there are some conversations around threats coming out of Iran and that type of thing that everybody in America is paying attention to as well as us. But a lot I am not aware of any conversations where there is discussions around exactly what will happen after today. I mean, you still have Trump as president regardless of what happens. So there is still gonna be certainly support for our industry and for what we do for this country and for the rest of the world. But we try not to worry about those things. We support them. We are big encouragers voting. I hope everyone this call gets out and vote. Very important. And we will see how the how everything works out this evening. But either way, we will wake up tomorrow morning, and we are gonna continue to grow and make this a great partnership for many years to come.

John Mackay: Thanks for the time, guys. Appreciate it.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Marshall S. McCrea for any closing remarks.

Marshall S. McCrea: Yes. Thank you. Everybody's kind of looking, oh my gosh, what is he gonna say? But I will not be too long here. But I guess you know, Tom and I for years have talked about how great our employees are and that is what makes us who we are. And as I look at Tom, I have really enjoyed working with him. A co CEO. You know, he is calm. he is easygoing. he is smart. he is well connected. he is very experienced, and I am kind of the opposite of all of that. And so it is it is it is been kind of a really good partner and I know of him being the sole CEO starting in January, is a great thing, and he will continue to lead this. I am very excited about that. he is got Dylan next to him. Dylan. Dylan's not the top CFO in our industry. He should be because he is very talented, brought a lot of value to our partnership, and he is put himself with a great team with Ashton and Troy and Justin and just a great group running our financial and accounting departments. And then you have got Bradford in tax. And Brad, probably the smartest guy in our company I do not understand about half of what he says, so I have to get an interpreter on that. But he is a very talented guy that brings a lot of value. And then I go to the commercial side. Adam Arthur, who is sitting next to me, is I joke that he started cleaning bathrooms, I think, in any transfer when he joined us. But no, he came with a master's, and he came with an intent to learn and to do well. And he is really prospered. he is brought a lot of value to our NGL business, to our crude business. And now over a lot of our interest take gas. And I think the sky's the limit where he is gonna go from a commercial standpoint. In this partnership, he is put together great teams, our crude team with Christina and Tyler and everybody under them, it is just phenomenal. You spend time with those folks like Tom and I do often. Just a talented group that extracting every bit of value they can of our assets. And then you go to RB and the team he is built in our NGL group with Brian up in Philly and John and John and others in Houston We have got incredibly smart people, very experienced people, with our crew that really extract value as you can see with all these NGL project products and. I am sorry, projects that we have done over the years. And I will continuing to build out you go into Brian Vevey and his GNP. You know, everything starts at the wellhead. Once it comes out of the wellhead, that is where we start making money. And so very important cog. In our Will and he and Alex and Michael and Todd and everybody that is built our GNP it is been really fun working with them, and I know they will continue to do what they do. Manav years to come. And on the interstate front, we have so many great projects going on just now. South Mississippi with Joey and Jimmy and Mike and their teams in Florida and Steve and all his guys and folks. Just exciting what is going on in the interstate front. it is been so fun. And then you look on the M&A. I mean, the way Kelsey and we have run this partnership for years is we have got a balance our m and a with our organic growth, and we have kinda got to have a balance off and on over the years. And right now, you can see we are we are turning pretty good on keeping that balanced. And with Christopher and his ability to do deals with Clyde, and, really, Christopher reaches out to everybody in this organization as he evaluates assets and companies. he is done such a great job. He looks at a lot of deals. We look at a lot of deals, and do not win many of them, but the ones we do win turn out to be great acquisitions. there is other upside that we think we are gonna get from those, and then there is always other upside synergies and revenues that we get that we do not anticipate. So what a great asset Christopher has been for our partnership. We have got an incredible legal team that you know, we. We are fighting. We do not like fighting. But when we have people drilling holes in our pipe and chain themselves to equipment and pouring sand equipment, that. Enough's enough. And so I think folks out there know that we will stand up for ourselves We will stand up for our industry. I am very proud of our legal team and the jobs that they have done. And then you talk about our ENC. Commercial works very closely with ENC with Mike and Raj. They have got such great teams. And a great example of that is Hugh Brinson and Christopher Hubard and what he is done to get Hugh Brinson built lot earlier than we would anticipated. And then now he is jumped over to Phase IX on Florida and probably part of South Mississippi. You got Fudge. His whole team out on DSW. it is just what an incredible ENC team that is that is bombarded with thousands of requests from our commercial teams every year, and they churn out all these costs that are so important to be accurate. So that we can be competitive and keep our market share. And then I turn to. They are active on and on and on, by the way, with our partnerships. it is incredible. As Tom and I say what. Who supports us and who makes us look good, But we go to our with Bill and with Brent and with Lindsay. They do such a great job. Communicating with y'all, everybody on this phone, communicating internally with everybody inside. Even this prep for these quarterly calls, just the amount of work they put into this. it is been a pleasure, and once again, they make us look good, like I said. And then finally, going to you guys, to all. Everybody on the phone and all the investors. That have stuck with us for all these years. And, you know, there were times when our coverage was not so great, and there were times when our leverage was a little bit higher than we wanted. And we had protesters, etcetera, etcetera. And y'all stuck with us, especially a lot of y'all and a lot that are on this phone that have been great loyal investors and believers in who we are and what we have done, and we appreciate that very much. And then again, going to Kelsey. I met Kelsey years ago. I think I interviewed with him for about 10 minutes. He told me to come back in 2 weeks, but I had to give notice where I was working as a landman. And then he would tell me what the salary was or they would. So I joined him, and then when he and Kelsey started. I mean, I am sorry. He and Ray started energy transfer Our first asset was a 10 inch 150 mile pipeline in East Texas full of nitrogen. We tied a gathering system into it. Tied it to TU. To TUFCO, and we took off from there. And. Am I forgetting? You oh, yeah. Oh my goodness. Yeah. Kind of important. I did not look at my notes. Probably the most important group, which is hard to say that, is our ops group. I actually had it on my deal. I was trying to speed up to get through this. But I should not have. So, yeah, Daniel, I will start with this. Start with Tom, and then Daniel The most important thing is, yes, we wanna run efficient system. We wanna run systems that are profitable. But the most important thing is safety. That our employees that come to work every day go home to their families every day, and that is the biggest emphasis we put. But after that, Daniel and his team have done incredible job. They throughout the country, we have such great operating people at Marcus Hook. Mont Belvieu, at Nederland, throughout all of our terminals and pipelines throughout the country. It would take forever. To give those people the credence, but also out in where we are most active with Andrew and Christopher and what they have done to not only continue to run the assets we have, over the years, but also to take new assets or assets we have purchased recently and turn them into the ET standard of reliability then as we brought on new cryos, they have done a great job there, and they will continue to do that. So, yes, they are such an important part. that is why I have a co CEO to remind me of the things I forget. And please keep doing that as I close out here. But anyway, with Kelsey and Ray buying the 10 inch, I think Kelsey is such a unique man. I mean, there is not many people like him with his aggressiveness, with his competitiveness, with his never-give-up attitudes, all of that. My dad had a lot of that same thing, but my dad did not have this massive vision that I think most people do not have of where things can go. And so he may be 1 that goes, I am not surprised we are at today? Well, I am shocked. Where this partnership's gone. I have enjoyed this ride the whole way. And then I look at kinda summarizing this, our assets. And hands down, I am always puzzled by why we trade as poorly as we trade compared to our competitors. It makes no sense. We look at our interest rate and intrastate pipeline network unmatched by far by anybody in the industry. You look at our crude business, we move about 30% of every barrel that is produced through our pipe. We moved about 25% excuse me, of every gas molecule that is produced in the state through our assets. We are 1 of the biggest exporters of natural gas liquids. We export a lot of oil. We have tremendous amount of. I think it is 80 million barrels of oil storage, 80 million barrels of NGL storage. We have 240 Bcf of gas storage. We are just so well positioned You combine that with what I started out this with our people, the best people in the industry. What works out is years like this. We are gonna be steady growing for many years to come, but we are so well positioned. To capitalize with our assets and our people and opportunities on volatility. And if this year is an example of that, I do not know what is. So our you know, the future is so great for energy transfer. You know, the best is yet to come. I hate leaving. it is bittersweet. I will certainly be the biggest cheerleader from the sidelines for this partnership. And I hope that y'all continue to believe, like, you should because there is a lot of great things that are happening now that we will be announcing over the next 6 to 12 months. And I look forward to where this partnership's going. But I appreciate everybody's support. Thank you for this call. Feel free to reach out to Bill and team on questions or and Ed, this has been a real pleasure. Take care. Have a good day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.